Natural Food International Announces 2019 Interim Results, Business News – AsiaOne

Profit Increased by 56.6% y-o-y to RMB105.3 million

Results Highlights

• Revenue increased by 7.8% to RMB917.5million y-o-y

• Profit for the period increased by 56.6% to RMB105.3 million y-o-y

• Recommended the payment of an interim dividend of RMB0.0181 per
  ordinary share

Financial Highlights

During the period under review, the Group continued to expand its
business and dedicate to build China’s most valuable natural health
food brand. The Group sells its products through an extensive
network of offline concessionary counters as well as online
channels. Absolute amounts of revenue generated from sales through
offline and online channels continued to increase as compared to
the corresponding period in 2018, while the percentage of revenue
generated from sales through online channels to total revenue
increased from 17.8% for the six months ended 30 June 2018 to 20.3%
for the Period.

Business Review

Increase in product iterations and revenue contribution from new
products

Leveraging its research and development capabilities and market
leading position to grow its business and broaden its customer base
, the Group has expanded its product offerings and launched 17
popular natural healthy food products during the Period, including
various healthy tea bags and congee. The increase in product
iterations has also promoted the sales of the Group’s existing
products as well as attracted new customers who are interested in
trying the Group’s new natural health food products. As a result,
the Group had attracted more than 22.8 million registered members
as at 30 June 2019.

Optimizing offline sales network and expand online presence

Regarding the offline channels, as at 30 June 2019, the Group
operated 3,454 concessionary counters in supermarkets in around 300
cities across China. During the period, the Group has upgraded over
300 existing concessionary counters to a new type of integrated
health food stores, which are designed to sell selected health food
products, in order to improve the in-store consumer experience and
satisfy additional demands. Furthermore, the Group launched its “sales partnership programme” in September last year, which is in
expectation to provide further incentives to the sales personnel
and in turn increase its sales revenue. As at 30 June 2019, the
sales partnership programme was carried out in over 400
concessionary counters.

Regarding the online channels, the Group continued to expand online
presence, and experienced a significant growth. Revenue including
the sales of third-party brand products generated from online
channels, represented an increase of approximately 23.8% year on
year. As the Group’s first online platform, Tmall flagship store
remained a significant revenue contributor to the Group for the six
months ended 30 June 2019, with revenue of RMB92.1 million,
representing an increase of 30.3% year on year. The Group also
continued to enhance membership services and interactions with its
fans through its WeChat member store to further promote customer
loyalty and encourage customers to purchase. As at 30 June 2019,
the Group had approximately 7.6million followers on its WeChat
official account.

Developing production and R

&

D capacity to meet the increasing demand

In view of the increasing demand of natural food in China and the
overloaded capacity of its production facilities, in March 2018,
the Group commenced construction of the first phase of its new
manufacturing facility in Nansha County, Guangzhou. The new
production facility has a total gross floor of approximately 60,000
square metres and is expected to be completed construction by the
end of 2019. After the completion, the Group’s estimated maximum
production capacity will increase to 40,000 tons per year.

In the area of research and development, the Group continued to
follow the market-oriented approach and is currently in the process
of broadening its product offerings to include grain-based meal
replacements, grain-based health snacks and grain-related health
supplements. In addition, the Group continued to pursue cooperation
with selected universities and research institutions to enhance its
capability for innovation. In particular, he Group jointly launched “Wugu Mofang Grain Nutrition Research Centre” （五谷磨房穀物營養研究中心） with
Chinese Nutrition Society （中國營養學會） in 2018 to conduct further
research on nutrients of natural grains. As at 30 June 2019, the
Group had completed the development over 180 new products that are
available for mass production.

Looking ahead, Mrs.   GUI Changqing,

Chairlady and Executive Director

of Natural Food International Holding Limited
,said,
” benefiting from the growing purchasing power and rising health
awareness of Chinese consumers, we remain full of confidence about
our future. Recently, PepsiCo became the company’s second largest
shareholder. We believe that through strategic cooperation with
PepsiCo, we will further expand market share and brand influence,
and also enjoy greater growth potential. Strategically, we will
further enhance integrated distribution platform and optimize
channel mix, expand and diversify product portfolio, strengthen
brand equity and enhance operational efficiency. The Group will
continue to maintain and strengthen our leading market position and
create more values for our shareholders.”

About the Group

Natural Food International Holding Limited

is the second largest natural health food company in China
according to Frost & Sullivan. The company successfully listed on
the Main Board of the Stock Exchange of Hong Kong Limited in 2018,
and generated an annual revenue of RMB1,818 million last year. Its
brand “Wugu Mofang”(
五谷磨房
) ranked first in terms of top-of-mind brand awareness and customer
satisfaction among all the natural health food brands in China and
as the most frequently consumed brand among all the natural health
food products in China. Infused with modern nutrition science and
food processing technologies, their diversified product portfolio
includes over 100 types of products.